Business Banking

What is an official check from a bank?

An official check is a check that draws from a bank's own funds. Learn about the uses of official checks and how to obtain one.

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Have you ever heard the term “official check” and wondered how it differs from a personal check? The main difference lies in its level of security. An official check is much more secure, making it an ideal form of payment for large purchases where a personal check or credit card will not do. Since official checks draw from the bank's own funds instead of the payer's bank account, the recipient can rest assured that the money will be available when they go to deposit it.

An official bank check is a document signed by a teller guaranteeing that the account holder has enough money to honor it. You have to visit a bank to get this type of check, and the funds are withdrawn from your bank account before it is issued, rather than after. When the payee signs the check, it is considered endorsed, and is ready to be cashed or deposited into their account. 

Official checks are generally used for large purchases, like real estate or a vehicle, when a secure payment is an essential requirement. These checks may be preferable in the following situations: 

  • Buying or selling a vehicle
  • Purchasing a down payment on a house 
  • Paying college tuition
  • Paying back a large debt 
  • Receiving a large sum of money from a settlement 

Official checks are generally more secure than personal checks and money orders. An official check is also a great option you may use whenever you need to make a payment but don't want your bank details revealed to the payee. When it comes to large transactions that need extra security, official checks are an ideal choice.

A variety of businesses, including mortgage companies and auto lenders, will accept official bank checks as a valid form of payment. You might prefer to use an official check as a payment option because they're accepted by many establishments and are easier than using cash. One major benefit is that they give the other party a sense of security, letting them know that you're serious about the transaction.

That said, you should always double-check what fees your bank charges for official checks, especially if it's your first time ordering one, so you don't get surprised by any hidden fees.

Why should you consider an official check?

  • Official checks are less expensive than bank drafts. 
  • Your money is secure. You never need to worry about the check being returned due to insufficient funds, since the money is drawn from the bank's account before the check is issued. You can avoid overdrafts and returned payments by using this type of check.
  • You get your money faster. Financial institutions determine the speed of deposit clearance based on their funds availability policies. For instance, some payments may take five business days or longer to clear, especially if they are large deposits. The holding period for official checks is often shorter than that of personal checks because the payment is guaranteed.
  • There's a lower likelihood of fraud. Since only the person who receives the checks can cash them, official checks help reduce the chance of check scams. An official check usually includes additional security features as well to prevent the use of fake checks. These features include a watermark, color-changing ink, and security threads.
  • Official checks are free to replace, so you don't have to worry too much about accidental loss or theft. However, note that the replacement process is not easy. If you lose an official check you will have to notify the bank, fill out a declaration of loss statement, and wait up to 90 days to retrieve the money.

Is an official check the same as a cashier's check?

Yes, an official check is also known as a cashier's check. Both terms refer to a type of check that is drawn from the bank's own funds, rather than from your own checking or savings account like in the case of personal checks. Official checks, or cashier's checks, are signed by a bank teller who confirms that the amount of money is ready for the payee to cash or deposit. This check is also commonly known as a treasurer's check. 

What is the difference between an official check and a certified check?

Official checks are drawn directly from the bank's own funds. After the payer deposits the money into the bank, the bank then issues a physical check for the transaction. Conversely, certified checks are drawn from your personal bank account, and the bank certifies that the funds are set aside and available to be deposited.

A certified check is a type of check that a bank has approved. This means that the bank guarantees its value, and it can be cashed at any financial institution without any worry. These checks come with specific requirements that are not always met by other checks. These requirements include features like specific wording, a unique certification process, and an official seal.

Both official checks and certified checks are a secure form of payment because the bank has guaranteed that the money is available to be deposited. In the case of an official check, this is because the money is pulled from the bank's own funds. With a certified check, this is because the bank has verified that the payer has enough money to pay out the check, and has set that money aside for when the check is cashed or deposited. These two options are both more secure than personal checks, which can bounce if the payer doesn't have enough money in their bank account at the time that they're cashed.

In terms of cost, both official checks and certified checks are typically in the $5 to $15 range, depending on the bank and their policies.

What do official checks look like?

An official check looks similar to a normal bank check, with a few key differences. Official checks tend to have a colored background, and the bank's name is written in bold letters, usually at the top of the document. Additionally, they may or may not state the words “Official Check”.

The bank prints the check with the payee's name and the amount due. Since the funds are pulled from the bank's own funds, the bank's account number is printed instead of your own bank account and routing number.

The payee will have to present their original bill of sale or other evidence that they have purchased the item that the check is intended to pay for.

How much does an official check cost?

The cost of an official check ranges from about $5 to $15, depending on the bank's policies. While some banks or credit unions may deviate from this range, you can typically expect a low cost for this type of check. While this is more expensive than using a personal check, you may want to consider opting for an official check when extra security is needed, like for sending large sums of money. Just make sure to enquire with your bank about whether they charge any additional fees on top of the cost of the official check.

Step by step process to get an official check

Step 1: Make sure you have the recipient's name before requesting a check. Be prepared to show your ID, such as a driver’s license or passport, to the bank teller.

Step 2: Bring the required amount of money to the bank of your choice. Note that it helps if the recipient has a branch of the same bank nearby, just in case any issues arise.

Step 3: Provide the details of the recipient, the amount to be paid, and a brief memo about what the payment is for.

Step 4: Enter the amount you wish to pay on a customer service form and request the check from the bank teller.

Step 5: Hand over the check money plus any bank fees as advised by the teller. If you have a checking account at that bank with the required amount of money, the amount of the check can be drawn from your bank account right away instead of using cash.

Step 6: Receive the check from the teller and send it to your payee.

Using an official check online 

Typically, individuals cannot make purchases online using an official check. An official check, also known as a cashier's check, cannot be sent over the internet. However, individuals can request an official check online from some banks and have it physically mailed to the payee.

Some financial institutions, including U.S. banks, allow customers to deposit cashier's checks via their mobile banking app. However, cashier check deposits made via mobile bank apps have a cap limit.

Banking institutions that offer cashier checks online or via phone do not issue them to non-customers. If you order official checks online from a traditional or internet bank, you will be required to pay delivery charges.

How to guard against fraud using an official check 

Official checks are a secure means of payment. To prevent forgery, banks print security measures on the official check. However, counterfeiting fraud still happens(1).

When initially deposited, a fake cashier's check will probably clear immediately. The cashier's check is drawn against the bank or credit union's account. When the bank detects that the check is a forgery, it will bounce the check.

Tips on how to guard against fraud when using an official check

  • Show the check to a teller at the bank to verify its authenticity. 
  • Wait a few days after depositing a check before attempting to use the money.
  • To confirm that the check is genuine, start by calling the financial institution, not the number printed on the check. Make sure to use the phone number provided when you search for the bank's contact information online. Then, request that the bank confirms the check requester's name and the check number.

Ensure you verify the check's legitimacy before making a purchase to avoid fraud or incurring debt. Several fraudulent check schemes take advantage of the fact that it might take banks weeks to discover a fake check.

What happens when you lose an official check

When you misplace a cashier's check, the bank will request an indemnity bond before issuing a replacement. Insurance companies offer indemnity bonds, but obtaining one might be challenging. This bond holds you accountable if the missing check is discovered and offered for payment.

The purpose of an indemnity bond is to ensure financial reimbursement. The bond guarantees the bank won't be held responsible for both checks' payments. The time it takes to get a replacement cashier's check varies per bank and might range from 30 to 90 days.

Other alternatives to an official check 

If a payee won't accept an official check, other alternatives for making payment include:

Money orders

Money orders are a safe way to make payments. Individuals can purchase money orders from post offices, retail businesses, and banks. You must pay the required amount and additional charges to buy a money order. Payers will write the money order out to a payee, who then takes it to a bank to either cash or deposit it. 

The money order can be bought using a debit card or cash. Typically, you can deposit and then purchase a money order on the same trip. Money orders frequently have a maximum value that individuals can purchase. To obtain a money order, you don't require a bank account. 

Certified checks

A certified check is drawn directly from your account. Although you and the bank have signed it, it is still a personal check. The bank ensures that the person writing the certified check has sufficient cash in their account to cover the cheque.

Until the check is deposited, the bank puts the money on hold. Unlike an official check, the bank does not make the payment. Instead, the bank's responsibility is to ensure that the payer has the funds required to make the payment.

Wire transfers

Wire transfers are electronic transfers of funds from one account to another. You can transfer funds online or at a bank if you'd rather pay in cash. You'll need to have the recipient's account, bank, and routing numbers to make the transfer. Wire transfer is suitable for long-distance payments. The fee for making a wire transfer may range from $14 to $50, depending on the bank and the recipient of the funds.

Business checking accounts as an alternative

If you need a secure form of payment for your business transactions, consider a modern business checking account. At Nearside, you can find all the perks you'd expect from a bank but without the NSF fees, monthly minimums, or maintenance fees. With our business checking account, you can earn 2.2% universal cashback rewards on all debit purchases in 2022.

By sending payments online, you can streamline your business and avoid the hassle of dealing with physical checks. Sign up today to get started with a checking account designed for your small business.

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